On February 1, 2016, Vermont Corp.pays $50,000 for shares of Stream, Inc.common stock and another $1,000 in commissions.
Assume that Vermont sells the Stream stock on May 20, 2016, for $53,000.In this case, Vermont recognizes

Question

On February 1, 2016, Vermont Corp.pays $50,000 for shares of Stream, Inc.common stock and another $1,000 in commissions. ​
Assume that Vermont sells the Stream stock on May 20, 2016, for $53,000.In this case, Vermont recognizes

Quizplus · Accepted Answer

Vermont Corp. initially invested $51,000 ($50,000 for shares + $1,000 in commissions) and sold the stock for $53,000, realizing a gain of $2,000. This gain increases both assets (from the sale proceeds) and stockholders' equity (from the realized gain).